UPDATE 2-Morgan Stanley selling its Indian private bank -sources

* Unit manages about $1 billion including loans -sources

* Private wealth business in India was launched in late 2008

* Potential buyers have been approached -sources

By Saeed Azhar and Sumeet Chatterjee

SINGAPORE/MUMBAI, Nov 7 Morgan Stanley
has launched the sale of its India private wealth management
unit, which manages about $1 billion including loans, after
entering the highly fragmented and competitive market just four
years ago, sources with knowledge of the matter said.

Wealth management platforms are usually sold for about 2 to
3 percent of the assets under management, although the sources
said it was not yet clear what price tag the unit could fetch.

Morgan Stanley has launched a strategic review of the
division, the sources said, a process that typically ends with a
sale.

The review is part of the bank's efforts to withdraw from
subscale wealth management operations globally, one of the
sources said.

The sources declined to be named because the sale process is
not public.

India is a particularly difficult market for wealth
managers. Cut-throat competition, high staff costs and weak
markets are squeezing revenue, while opportunities for growth
are limited by regulations that restrict product offerings and
by the concealment of billions of dollars of personal wealth
from tax officials.

Many foreign players had scrambled to open up shop in India
a few years back and aggressively ramped up operations to take
advantage of robust economic growth, only to find themselves
struggling.

"From the macro perspective it looks great in India, but
when you get down to the ground it's a very different game," one
of the sources said. "People get smitten by the India
opportunity but very few people will succeed in this market."

LONGER-TERM PROSPECTS

Swiss private banks without a presence in India may be among
possible bidders for Morgan Stanley's private banking business,
drawn by the longer-term prospects of Asia's third-largest
economy, market sources said.

"It will be a good opportunity for a new player to launch
their operations in India instead of going through the two- to
three-year process to build the business," said a wealth manager
with a leading European bank in Mumbai.

India's ranks of millionaires shrank 18 percent to 125,500
last year, according to Capgemini and RBC Wealth
Management's world wealth report released in June, reflecting a
one-third decline in stock market values and a weakening rupee.

Last year marked the first time India's wealthy declined in
number since 2008.

But in the longer term, wealth is expected to rise steadily
in Asia, with relatively brisk economic growth creating large
numbers of new millionaires annually in India, China and across
the region - a trend that banks have tried to harness.

The challenge for the industry is that newly minted
millionaires in Asia, rather than turning to private banks for
help in preserving wealth as would clients in the United States
and Europe, have treated banks more like brokers, working with
several at once to increase their wealth.

Morgan Stanley Chief Executive James Gorman told an earnings
call in July that scale was important in the wealth business for
driving returns and that the bank was "taking steps to unlock
value in our wealth management businesses outside North
America".

The shakeup in the industry in Asia has accelerated since
last year. Significant deals include Bank of America Merrill
Lynch selling its overseas wealth management business to
Switzerland's Julius Baer and HSBC selling
its private bank in Japan to Credit Suisse.

Morgan Stanley launched its private bank in India with
fanfare in late 2008 as it marked the U.S. bank's first onshore
wealth business in Asia. It was also planning to launch a
similar business in China, but has yet to do so.

The India unit has 70 people on staff, the sources added.

The sale plan does not affect Morgan Stanley's other
businesses in India, one of the sources said.

Les Menkes, who oversaw the launch of the India business,
left the bank last year, separate sources familiar with the
matter said.

Dec 8 Fixed annuity service provider Athene
Holding Ltd said its initial public offering of 27
million class A shares raised $1.1 billion after the offering
was priced in the mid-point of its expected range, valuing the
company at about $7.55 billion.

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